ACIT, SRIGANGANAGAR V. The Ganganagar Kendriya Sahakari Bank Ltd., SRIGANGANAGAR

ITA 242/JODH/2010

• Counselvise Citation: 24223314 RSA 2010
• Duration Of Justice: 2 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 19-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M N MAURYA
• Keywords: Gift

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI R.K.GUPTA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NOS. 241 & 242/JU/2010 ASSESSMENT YEARS: 2006-07 & 2007-08 THE ACIT, CIRCLE, VS. THE GANGANAGAR KENDRIYA SAH AKARI SRI GANGANAGAR BANK LTD., SRI GANGANAGAR PAN NO. AABFT0209R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.N.MAURYA RESPONDENT BY : NONE DATE OF HEARING : 16-07-2012 DATE OF PRONOUNCEMENT : 16-07-2012 ORDER PER N.K.SAINI, A.M. THESE TWO APPEALS FILED BY THE DEPARTMENT ARE DIREC TED AGAINST THE SEPARATE ORDERS EACH DATED 18.1.2010 OF CIT(A), BIK ANER. SINCE COMMON ISSUE IS INVOLVED IN BOTH THESE APPEALS, THESE APPE ALS WHICH WERE HEARD TOGETHER ARE BEING DISPOSED OF BY THIS COMMON ORDER . 2. FIRST WE WILL DEAL WITH ITA NO. 241/JU/2010. TH E ONLY GROUND RAISED IN THIS APPEAL RELATES TO DELETION OF ADDITI ON OF RS. 9,32,840/- MADE 2 BY THE ASSESSING OFFICER ON ACCOUNT OF FRINGE BENEF IT TAX, BY HOLDING THAT CHARGING OF FBT ON EMPLOYEE WELFARE, UNIFORM A ND MEDICAL BILLS AS WELL AS GIFTS WAS THE AMOUNT RECEIVED BY THE EMPLOY EES AND WOULD CONSTITUTE PERQUISITE IN THEIR RESPECTIVE HANDS. 3. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSE SSEE FILED ITS RETURN OF INCOME OF FBT (FRINGE BENEFIT TAX) ON 31.10.2006 D ECLARING VALUE OF TAXABLE FRINGE BENEFITS OF RS. 5,27,000/-. THE ASSE SSING OFFICER NOTICED THAT THE ASSESSEE HAD DECLARED EXPENDITURE ON TELEP HONE, ENTERTAINMENT, CONVEYANCE AND ON TA/DA TOTALING TO RS. 26,32,000/- AND THE TAXABLE VALUE @ 20% HAD BEEN DECLARED AT RS. 5,27,000/. TH E ASSESSING OFFICER ALSO NOTICED THAT THE ASSESSEE HAD SHOWN AN EXPENDI TURE OF RS. 6,66,000/- AS COST OF GIFT ARTICLES AND CLAIMED EXPENDITURE OF RS. 4,54,178/- AS MEDICAL HELP TO STAFF AND RS. 1,40,855/- ON WELFARE OF STAFF BUT HAD NOT DECLARED THESE EXPENDITURE AS TAXABLE IN THE RETURN OF FBT. THE ASSESSING OFFICER ALSO NOTICED THAT AS PER PROFIT AND LOSS AC COUNT AND DETAILS FILED, THE EXPENDITURE ON TELEPHONE CHARGES WAS AT RS. 6,3 0,171/- WHEREAS THE ASSESSEE HAD DECLARED EXPENDITURE OF RS. 5,68,000/- IN THE RETURN FOR THE PURPOSE OF FBT. THE ASSESSING OFFICER CONSIDERED T HE ABOVE SAID EXPENDITURE AS TAXABLE FRINGE BENEFITS. 4. THE ASSESSEE CARRIED THE MATTER TO LD. CIT(A) AN D SUBMITTED THAT OUT OF TELEPHONE EXPENDITURE OF RS. 6,30,171/- A SUM OF RS. 2,30,308/- WAS 3 INCURRED ON POSTAGE WHICH WAS NOT LIABLE AS FRINGE BENEFIT. IT WAS FURTHER STATED THAT ONLY THE BENEFITS WHICH WERE COLLECTIVE LY ENJOYED BY THE EMPLOYEES AND COULD NOT BE ATTRIBUTABLE TO THE INDI VIDUAL EMPLOYEE WERE ONLY TO BE TAXED UNDER FBT IN THE HANDS OF THE EMPL OYER. IT WAS CONTENDED THAT THE EXPENSES INCURRED ON ACCOUNT OF EMPLOYEE WELFARE, UNIFORM AND MEDICAL BILL WERE INCURRED ONLY TO MEET THE STATUTORY OBLIGATION OF THE EMPLOYER AND WERE DIRECTLY LINKED TO A PARTICULAR EMPLOYEE. THUS, THE EXPENSES AT THE BEST COULD BE TREATED AS PERQUISITE BUT CERTAINLY NOT FRINGE BENEFIT. IT WAS FURTHER S UBMITTED THAT GIFT ARTICLES HAD BEEN DISTRIBUTED TO THE EMPLOYEES ON THE DIRECT IVES ISSUED BY THE RAJASTHAN CO-OPERATIVE DEPARTMENT WHICH WAS THE GOV ERNING BODY OF THE ASSESSEE. THUS, THE GIFTS WERE DISTRIBUTED TO DIFF ERENT EMPLOYEES ACCORDING TO THEIR PAY SCALES AS PER THE SAID DIREC TIVES. THEREFORE, THOSE WERE NOT GENERAL EXPENSES AND HAD BEEN INCURRED EM PLOYEE WISE. THE ASSESSEE ALSO FURNISHED DETAILS OF PAYMENT ON MEDIC AL EXPENSES IN RESPECT OF EACH EMPLOYEE. 5. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE OBSERVED THAT CHARGING OF FBT ON ENTIRE TELEPHONE E XPENSES BY THE ASSESSING OFFICER WITHOUT EXAMINING THE COMPLETE DE TAILS WAS NOT JUSTIFIED BECAUSE THE POSTAGE COMPONENT IN TELEPHON E EXPENSES WAS NOT A FRINGE BENEFIT. AS REGARDS THE CHARGING OF FBT ON EMPLOYEE WELFARE, UNIFORM AND MEDICAL BILLS AS WELL AS GIFTS, THE LD. CIT(A) WAS OF HE VIEW 4 THAT THE RECIPIENTS OF SUCH EXPENDITURE WERE SHOWN TO BE INDIVIDUAL EMPLOYEES AND THE EXPENSES WERE NOT GENERAL IN NATU RE BUT WERE CO- RELATABLE TO INDIVIDUAL EMPLOYEES. THEREFORE, THE A MOUNTS RECEIVED BY SUCH EMPLOYEES WOULD CONSTITUTE PERQUISITE IN THEIR RESPECTIVE HANDS. THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER OF THOSE EMPLOYEES TO BRING THE SAME TO TAX IN THEIR HANDS, IF NOT ALREADY DONE BUT THE ADDITION MADE IN THE HANDS OF THE ASSESSEE WAS DELETED. NOW THE D EPARTMENT IS IN APPEAL. 6. DURING THE COURSE OF HEARING, NOBODY WAS PRESENT ON BEHALF OF THE ASSESSEE, THEREFORE, THE ISSUE IS DECIDED EX. PARTE QUA THE ASSESSEE ON MERIT, AFTER HEARING THE LD. CIT-DR. THE LD. CIT -DR STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND FURTHER SUBM ITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. CI T-DR AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, NOTHING IS BROUGHT ON RECORD BY THE DEPARTMEN T TO SUBSTANTIATE THAT THE EXPENSES INCURRED WERE COLLECTIVELY ENJOYED BY THE EMPLOYEES AND THE CONTENTION OF THE ASSESSEE THAT GIFT ARTICLES, MEDI CAL EXPENSES ETC. WERE RELATABLE TO INDIVIDUAL EMPLOYEES HAS NOT BEEN REBU TTED AT ANY STAGE. IN THE INSTANT CASE, EXPENSES INCURRED WERE NEITHER F OR ENTERTAINMENT NOR FOR HOSPITALITY. AT THE MOST, THOSE CAN BE CONSIDERED AS A PERQUISITE, 5 THEREFORE, IN OUR OPINION, THE LD. CIT(A) WAS FULLY JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO TAX THE SAME AS PERQUISITE IN THE HANDS OF THE INDIVIDUALS EMPLOYEES, IF NOT ALREADY DONE. WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A). 8. IN ITA NO. 242/JU/2010 FOR THE ASSESSMENT YEAR 2 007-08, THE FACTS ARE SIMILAR AS WERE IN ITA NO.241/JU/2010 FOR THE A SSESSMENT YEAR 2006- 07. THE ONLY DIFFERENCE IS THAT THE AMOUNT IN QUES TION IS RS. 7,05,170/- INSTEAD OF RS. 9,32,840/- IN THE PRECEDING YEAR. T HEREFORE, OUR FINDINGS GIVEN IN FORMER PART OF THIS ORDER IN RESPECT OF IT A NO. 241/JU/2010 (SUPRA) SHALL APPLY MUTATIS-MUTANDIS FOR THIS YEAR I.E ASSESSMENT YEAR 2007-08 ALSO. 9. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF JULY, 2012. SD/- SD/- (R.K.GUPTA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : JULY, 2012 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR ITAT, JODHPUR 6